Much was made of the fact that American farmers turned out in droves on Election Day to support then-Presidential candidate Donald Trump. In theory, Trump’s presidency would bring the U.S. an agriculture boom. In reality, with U.S. trade policy in limbo and proposed budget cuts that will adversely impact rural communities, there’s little doubt that we’re entering a new era of U.S. agriculture policy – one that is leaving the industry feeling understandably skittish about the road ahead.
Three days after taking office, Trump signed a presidential memorandum ordering the U.S. to withdraw from Trans Pacific Partnership negotiations, a proposed 12-nation pact to liberalize trade between the U.S. and Pacific Rim nations. Days later, the administration announced it was considering a 20 percent tariff on imports from Mexico. Trump further committed to renegotiate NAFTA, the free trade agreement between the U.S., Canada and Mexico, and to “tear it up” if he could not get a “great deal.” He also threatened to impose punitive tariffs on Chinese goods. Now, the Administration’s proposed budget recommends cuts in key areas for U.S. agriculture.
These actions are largely intended to protect, even increase, American jobs, but they may have unintended consequences for the sector that gave such support to Trump in the election: agriculture.
So, what’s at stake for U.S. agriculture if Trump makes good on his promises?
- Getting caught in the crosshairs of trade wars: Trade disputes can impact industries that aren’t directly involved, because punitive trade measures aren’t always confined to the same industry as the measure to which they’re responding. For example, in response to a determination by the World Trade Organization (WTO) that the United States’ Country of Origin Labeling (COOL) unlawfully favored American meat, Canada and Mexico enacted retaliatory tariffs on apples, biscuits, wine and more. The agricultural industry in particular may be disproportionally targeted in retaliatory trade measures because the U.S. has exported far more agricultural products than it has imported since the 1960s. The volume and variety of agricultural exports increases the likelihood that they will be the subject of punitive trade policies.
- Winning or losing based on trade renegotiations: While renegotiating trade agreements may comfort those who are uneasy about globalization, the prospect leaves many in the agricultural community nervous. The American Farm Bureau Federation shared that the now-defunct TPP would have increased annual net farm income by $4.4 billion. The National Cattlemen’s Beef Association pointed out that not having the TPP costs the industry $400,000 in sales a day, and that NAFTA has increased beef exports to Mexico by more than sevenfold. American commodities – everything from beef, pork and poultry to oils, nuts, grains, produce and dairy – are under tremendous pressure to build a vibrant overseas marketplace for their products. With countries like China swooping in to meet the growing demand, one can’t help wonder if U.S. agriculture has the luxury of time to wait for bilateral agreements to be worked out in critical growth markets.
- Potential ripple effect: A number of industries are less obviously impacted by a given trade policy. These include processing, trucking, rail and ports. All depend on, or are linked to, agricultural trade, and would be negatively impacted if there is an export slow-down. If Trump follows through on his promises, the ripple effect could actually impact the jobs of thousands of Americans who work in these industries, many of whom supported him in the election.
- Agriculture 101 needed: As the saying goes, hindsight is 20/20. Looking back at the campaign, when Trump stressed putting America first, he was talking about manufacturing, not agriculture. This is first evidenced by the hole within the current Administration in terms of a confirmed Agriculture Secretary, and is further underscored by Trump’s proposal that cuts budget for the U.S. Agency for International Development – which spent $1.3 billion in 2014 to purchase U.S. crops that were then sent to food-strapped markets. As crop prices have fallen and yields have risen, these programs have become more important to easing surpluses and supporting U.S. farmers, as well as providing jobs in the packaging, distribution and transportation industries. In addition, the proposed budget also includes $4.7 billion in cuts to the U.S. Department of Agriculture for things like grants and loans for water and sewage facilities in rural communities. Trump’s cabinet and senior advisors represent a blank slate in terms of agricultural expertise. Therefore, it’s critical that the incoming USDA Secretary help the rest of the Administration understand how U.S. agriculture works and how trade and aid is a critical factor for success. The yet-to-be-confirmed Secretary of Agriculture, Sonny Perdue, is an obvious solution. He grew up in farming, and has spent much of his career in agriculture and trade. Whether the cabinet position goes to Perdue or someone else, a major part of the job will no doubt be focused on helping the Administration comprehend the role and importance of U.S. agriculture in building the national economy.
If U.S. agriculture is going to remain relevant to the fabric of our nation, there’s a role for business to step up and help the incoming USDA chief educate others about U.S. agriculture’s benefits to the broader economy. Farmers, agribusinesses and associated industries can provide the secretary with the data, first-hand stories and impact projections required to ensure the White House understands the needs of rural communities and implications of various policy choices.
When it comes to trade and the promotion of U.S. agricultural products abroad, other industries that could be impacted by the ripple effects of trade, aid and agricultural policy should be seen as partners in this effort. Just like in manufacturing, agriculture needs to have a strong position on what it will take to sustain our vibrant agricultural ecosystem that supports the entire supply chain. All stakeholders need to be part of this effort, so that the Administration can see the impact of its recommendations in full. Such collaboration would bolster each industry’s respective messages into a powerful, comprehensive narrative underscoring the indisputable value of U.S. agriculture and its associated industries.
Jobs are vital to all Americans, but just like our manufacturing sector, trade and agriculture are vital to American industry, too. Exploring the impacts of proposed policies across sectors, geographies and populations is essential to crafting policies that balance the multitude of industries that have always made American agriculture great.
Tish Van Dyke is global sector chair, Food and Beverage sector.